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Warning that UK economy is heading into recession

THE economy is heading into recession and may face a slump on the scale of the early 1990s, according to Deloitte, one of Britain's leading accountants. Another, KPMG, says more than half of businesses are planning job cuts.

Deloitte's quarterly economic review examines the effect of the lower pound on industry and asks whether export-led growth will prevent a severe downturn. Roger Bootle, its economic adviser, believes it will not. He said: "While the sharp fall in the UK exchange rate seen since last summer should eventually lead to a period of better-balanced growth, like that enjoyed in the mid-1990s, it won't prevent the credit crunch and a sharp retrenchment in corporate spending from sending the economy into recession."

After figures on Friday showed that quarterly growth had fallen to 0.2% in the second quarter of this year, Deloitte says a "technical recession" of two or more consecutive quarters of